Amazon wants to show you in person how valuable prime is
- Amazon opened its first Amazon 4-star concept store in New York in September.
- It's reportedly already expanding the concept to another location in Berkeley, California.
- The concept is designed to bring the successful formula of Amazon's website into the real world.
- One of the most successful elements - Amazon Prime - is front and center throughout the store.
- It proves how important Prime is to Amazon's ambition for growth.
Amazon's new concept bakes an advertisement for Prime into every price tag.
The store, called Amazon 4-star, stocks only items that customers have rated four stars or above, on average, on Amazon.com. That means it will include only the best of the best, in the eyes of Amazon's customers.It opened in Manhattan's SoHo neighborhood on September 27, and another will reportedly open in Berkeley, California, soon.
The store essentially uses the same format as the brand's AmazonBooks store, but has more categories on offer, including toys and games, home and kitchen, and yes, books. Amazon 4-star also displays customer reviews as Amazon Books and the same cashless checkout process.
It also uses the same pricing system, where Prime members pay the Amazon.com price but everyone else pays the manufacturer's suggested retail price. Both prices are displayed on the electronic price tag under every item of merchandise.
The difference is stark when compared to AmazonBooks. While books are something people generally are prepared to the full price on the back cover - the same price they'd pay at Barnes & Noble or a local bookstore - other merchandise is more regularly discounted.
In effect, that means every purchase - or purchase considered - will show customers a little slice of what the membership offers, either consoling them if they're members or one step close to convincing them to join.
Amazon also made joining frictionless, with a 30-day free trial available at check-out.Amazon knows that Prime is its golden goose. It keeps adding more and more to the suite of benefits it provides its members.
While many still associate Prime solely with its two-day-shipping guarantee, it also has other benefits like video and music streaming, and there are some items that are available only to Prime members, which creates additional value.
In May, Prime members were given another perk: big discounts at Whole Foods, the roll out of which was completed this summer.
The value of Prime has risen steadily as Amazon has added more benefits to the program over the years. A recent JP Morgan analysis estimated that the service is actually worth $785 a year when everything it offers is counted together. That's six and a half times the actual cost of an annual Prime subscription of $120 a year, even with this year's price increase.
"Prime delivers such massive scale and features that we believe it would be very difficult for any company to replicate and compete against, and Amazon continues to expand and add more value to Prime by adding new benefits and growing existing offerings," the analysts wrote.
That means that even if a customer does not take advantage of everything Prime membership has to offer, there's still the perception that they're getting a good value for their money.
Amazon has a vested interest in keeping these Prime customers happy. Prime customers are by far Amazon's most loyal, buying more stuff more often. They're also more likely to delve deeper in the Amazon ecosystem, taking up Alexa-enabled devices and subscribing to addition services like Amazon Music.